dcsimg
Home >> News >> LoanBlog >> Federal Reserve

Mortgage Modification: Another Hurdle for Some

January 2nd, 2009

If you took out a ‘piggyback’ second mortgage (aka a ‘junior-lien loan’) to cover, say, your down payment or private mortgage insurance (PMI), then you may have problems if you need a loan modification. Read the rest of this entry »

Mortgages: Fed Throws in the Kitchen Sink

December 19th, 2008

There was a very good article about the US economy in general–and mortgages in particular–in the Times this morning. No, not the New York Times or the Los Angeles Times. It was in the original Times, which was first published in 1785 in London, England. Maybe you need to view things from across the Atlantic to get some perspective on our current financial plight.

Anyway, I urge you to read the piece. It’s all about the Fed’s latest policy of ‘quantitative easing’. Never heard of it? Me neither, up until very recently. But bankers do tend to use dry language, even to describe their most radical initiatives.

And quantitative easing is sure radical. It is the printing of vast amounts of money to buy up long-term debt-mortgage securities and government bonds. And if there’s a grain of truth in Milton Friedman’s monetarist theories, that can only mean inflation.

Perhaps we could use a dose of inflation to kick-start the mortgage and real estate markets. Maybe the alternative, stagflation, is even worse. The Times isn’t so sure. It says:

Quantitative easing is, in essence, what you do as a central bank when you have run out of things to do to avert catastrophe. It is that moment in the horror movie when you are backed up into the kitchen by the intruder and you start pulling out the kitchen sink as your last weapon.

Record-Setting Week Means Good News for Mortgage Shoppers

December 18th, 2008

It was a record-setting week all around, which adds up to good news for mortgage shoppers:

While economic weakness is enough to give some home buyers pause, it is important to remember this same economic weakness is creating the extraordinary buying opportunity.

Read the rest of this entry »

Mortgage Opportunities from Record Rate Cut

December 16th, 2008

Late yesterday (Tuesday) afternoon, the Federal Reserve slashed its target for the overnight federal funds rate to a range of 0 to 0.25 percent. That may sound like meaningless gobbledygook, but it’s not. It’s an all-time record low. Read the rest of this entry »

New Fed Tactic Triggers Dramatic Drop in Mortgage Rates

November 27th, 2008

This week’s mortgage news was dominated by a dramatic drop in mortgage rates triggered by a new Federal Reserve approach to the financial crisis.

Of all the actions taken to address this crisis, none has had such immediate and tangible effects. Neither lowering Fed rates nor providing direct financial support to lenders seemed to make so much as a ripple in the credit markets. However, on news of this latest Fed program, 30-year mortgage rates dropped the better part of a full percentage point, falling near their all-time lows.

The Fed has announced that it will buy $600 billion in existing, mortgage-backed debt. This move both frees up capital for new lending, and gives lenders renewed confidence to make loans. It is the latter especially that accounts for the immediate drop in interest rates.

It is worth a closer look at what this action will and won’t accomplish, but in the short term it is undeniable that it has created a rare opportunity for home buyers and people who want to refinance. 

Read the rest of this entry »

What Will an Obama Administration Mean to Mortgage Rates?

November 6th, 2008

By far, the dominant news story this week was the election of Barack Obama as the 44th President of the United States. While people have different ideological views on what this means to the nation, it is also natural to view any news of this magnitude through a lens of personal self-interest. For anyone contemplating buying a home, the question of self-interest that comes to mind is: what will an Obama Administration mean to mortgage rates?

Specifically:

  • What will be the impact of Obama on the current financial crisis?
  • What will be the impact of Obama’s long-range fiscal policies?

Looking at the recent news provides some perspectives on what the Obama Presidency will mean for mortgage rates, both short-term and long-term.

Read the rest of this entry »

Trick for Treat: Mortgage Rates Defy Federal Funds Rate Cut

October 30th, 2008

To much fanfare, the Federal Reserve cut interest rates on October 29th. That was supposed to be this week’s Halloween treat for the markets. The trick came the next day, when Freddie Mac’s survey of mortgage rates revealed that 30-year rates had risen sharply for the week. 

So what gives? A clue to why market rates moved contrary to the federal funds rate could be found in two other pieces of news:

For the time being then, despite the Fed’s actions, things got tougher for borrowers rather than easier. This highlights some realities of what the Fed can and cannot do.

Read the rest of this entry »

Mortgage Rates Zig and Zag: This Week It’s Down

October 23rd, 2008

As expected, mortgage rates continued their manic behavior, heading downward this week as focus shifted to the likelihood of recession: 

Certainly, this is the most troubling economic environment in a generation — but one with at least some glimmer of hope.

Read the rest of this entry »

Connect the Dots… to Lower Mortgage Rates

August 7th, 2008

Current events give a good demonstration of what really drives market interest rates:

The reason for the drop in mortgage rates can be traced to a third significant development:

All of which suggests that potential homebuyers — or mortgage refinancers — would do well to keep their eyes on the price of oil in the weeks ahead. 

Read the rest of this entry »

Heads-Up Borrowers: Dramatic Week for Mortgage News

July 17th, 2008

There were mixed messages for borrowers in this week’s mortgage news, but there was certainly no shortage of headline-worthy stories:

The message on balance was that potential mortgage borrowers may not want to delay exploring their options, as long as they make educated choices about their loans.

Read the rest of this entry »